Economic Update – UK Savings at Record Low, Bank of England Warning, US Auto Sector Concern, Trump…

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Here are some recent headlines pertaining to consumer debt levels and savings in the UK as well as increasing concerns about the state of the US automobile industry.

Whilst most of these headlines originate from mainstream media, they are not at the forefront of any national conversation. Right now an alleged chemical attack in Syria and growing tensions with North Korea are taking precedent over the economy.

The narrative is gradually being sewn that consumer debt is becoming unmanageable just as rising inflation starts to push up interest rates. To further exacerbate matters, Donald Trump’s administration are preparing to reveal their infrastructure spending plans (estimated to amount to over $1 trillion).


The Guardian: UK households’ savings fall to record low in warning sign for economy

  • British households ran down their savings to a record low at the end of 2016, raising fears that the UK is on course for a fresh consumer debt crisis.
  • The saving ratio – which estimates the amount of money households have available to save as a percentage of their total disposable income – fell sharply in the fourth quarter last year to 3.3% from 5.3% in the third.
  • It was the lowest since records began in 1963.

The Telegraph: Three charts that show Britain’s borrowing binge isn’t over as growth in credit card debt hits 11-year high

  • Credit card debt grew at the fastest annual pace in more than a decade in February, as low interest rates encouraged Britons to binge on cheap credit.
  • Borrowing on credit cards and personal loans rose by £1.4bn last month, according to Bank of England data.
  • Credit card debt rose to a fresh record of £67.3bn in February, while the annual pace of growth climbed to 9.3pc – the fastest pace since February 2006.

Bloomberg: BOE Reviews Consumer Credit Surge as Citigroup Warns of `Bubble’

  • U.K. regulators are starting a review into consumer borrowing after the Bank of England warned again about a potentially unsustainable buildup of debt.
  • The BOE’s Financial Policy Committee said household indebtedness “remains high by historical standards and has begun to rise relative to incomes.” Noting that consumer credit has been growing particularly rapidly, it said this could be a risk to lenders if underwriting standards aren’t strong enough.
  • Citigroup said U.K. consumers are taking out more unsecured loans than they can pay back and losses will rise for the banks that are making them, including Lloyds Banking Group Plc and Barclays Plc.

MATASII: THE AUTO INDUSTRY IS ABOUT TO DRIVE OFF A CLIFF — AGAIN!

  • In the fall of 2015 we released a video study entitled: “The Coming Global Auto AbyssToo Much Supply, Too Many Brands; Combine with Too Much Credit!”.  We concluded that low interest rate monetary policy for the auto industry was like handing crack cocaine to a drug addict. The auto industry would rapidly and irresponsibly abuse it, to such an extent that it would once again ‘spin out’ and careen back to what can only be termed the Washington ‘substance abuse center’. Whether mis-management or clever strategy we are unfortunately being proven right and are now witnessing the reality…

Market Watch: Trump says infrastructure plan could top $1 trillion

  • President Donald Trump told chief executives of major companies on Tuesday that his administration is working on an infrastructure plan worth $1 trillion or maybe more.
  • Trump told the audience that he wants to speed up permitting for road and bridge projects and that federal money wouldn’t go to projects that couldn’t be started within three months.
  • “If you have a job that you can’t start within 90 days, we’re not going to give you the money for it,” he said.
  • “We’re talking about a very major infrastructure bill of a trillion dollars, perhaps even more,” Trump said.
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